University Graduates Have Better Incomes, Higher Professional Status and Greater Life Satisfaction
ResearchZEW Study on the Effects of Graduating from University
According to estimates, three in ten students in Germany leave university before completing their degree. Compared to graduates, university dropouts are more likely to have both lower incomes and a lower professional status. In addition, university dropouts tend to have a lower overall life satisfaction than graduates. Professionals holding a university degree are also more likely to work more hours per week. These are the results of a study conducted by researchers from ZEW Mannheim, who analysed the medium- and long-term consequences of dropping out of university.
The study was carried out as part of a project on the costs and returns from major changes and dropouts from university, funded by the Federal Ministry of Education and Research as part of the funding line “Studienabbruch und Studienerfolg” (“Dropout from University and Academic Success”).
In the study, the researchers examined the differences between individuals with and without a university degree. At the same time, the study also compares university dropouts to individuals who chose not to study despite being qualified to enter university. The estimated differences were calculated on the basis of an econometric method that aims to ensure the highest possible degree of comparability between these groups.
Graduating is worthwhile in terms of future income
In terms of working hours, wages, professional status and life satisfaction, the study found little difference between university dropouts and employees who never went to university despite their access qualifications. While the life satisfaction of university dropouts are, on average, 2.8 per cent lower, their professional status has been found to be, on average, 5.0 per cent higher. In terms of gross wages and working hours, no statistically significant differences were found between these two groups of employees.
On average, employees with a university degree earn significantly higher gross wages (plus 35 per cent) and work more hours (plus 2.2 hours per week) than the two employee groups mentioned above. They also achieve a higher professional status and have a moderately higher general life satisfaction. “Accordingly, obtaining a university degree is worthwhile in terms of future income, which can be further increased with the number of working hours,” says Julia Heigle, a researcher in the ZEW “Labour Markets and Human Resources” Department and co-author of the study.
University graduates tend to work in high-status jobs
For this study, the researchers drew a sample of 1,670 individuals with university entrance diplomas between the age of 25 and 65, using data from the German Socio-Economic Panel (SOEP) for the year 2016. The researchers apply machine learning methods to estimate how dropping out of university or finishing a degree influences professional success and life satisfaction.
Both university dropouts and employees who did not enter university tend to work in technical occupations or in non-technical professions with similar professional status to nursing or administration. However, university dropouts are somewhat more likely to work in organisational positions or business consulting. In contrast, people who completed their studies are more likely to achieve the highest professional status, for example by working as doctors, teachers or other academic professionals.
“Compared to the individuals who didn’t complete their studies, graduates tend to achieve better labour market outcomes in all areas considered in the study. Increased support for students who are considering dropping out of university so that they leave with a degree would most likely have a positive effect on those affected,” concludes PD Dr. Friedhelm Pfeiffer, deputy head of the ZEW Research Department “Labour Markets and Human Resources” and co-author of the study.
